DENVER, May 15, 2013 /PRNewswire/ -- Gasco Energy, Inc. (OTCQB: GSXN) ("Gasco" or the "Company") today announced financial and operating results for the first quarter ended March 31, 2013.

Note Regarding Uinta Basin Joint VentureDuring Q1-12, Gasco conveyed a 50% interest in certain of its Uinta Basin properties to its joint venture partner concurrent with the March 22, 2012 closing of the joint venture. Q1-13 is the fourth full reporting period in which Gasco's Uinta Basin net production reflects this conveyance under the terms of the Gasco-operated joint venture. Due to the 50% interest conveyance, operational and financial results for the three-month period ended March 31, 2013 are not similarly comparable to the same period ended March 31, 2012.

Q1-13 Financial ResultsOil and gas sales for the first quarter ended March 31, 2013 were $1.9 million, as compared to $3.2 million for the same period in 2012. Natural gas sales comprised 77% of total oil and gas sales for Q1-13. The year-over-year decrease in oil and gas sales is primarily attributed to the sale of a portion of the Company's interest in its properties in the Uinta Basin transaction, a 10% decrease in the average price received for the Company's oil volumes, offset in part by a 22% increase in the price received for natural gas volumes.

Gasco's average realized gas price was $3.38 per thousand cubic feet of natural gas (Mcf) for Q1-13, compared to $2.77 per Mcf in the prior-year period, excluding the effect of hedges. During June 2012, the Company monetized its remaining commodity hedge contract, and the Company currently does not have any commodity hedges in place.

The average realized oil price for Q1-13 was $79.21 per barrel, as compared to $88.26 per barrel for the prior-year period. Gasco does not hedge its crude oil volumes.

For Q1-13, Gasco reported a net loss of $1.7 million, or $0.01 per basic and diluted share, as compared to a net loss of $5.1 million, or $0.03 per basic and diluted share in Q1-12.

As of March 31, 2013, Gasco's total assets were $52.8 million, its stockholders' equity was $16.0 million, and cash and cash equivalents were $1.8 million.

The Company had long-term debt of $45.2 million as of March 31, 2013, consisting of its 5.5% convertible senior notes due 2015 (the "2015 Notes"). The Company has not paid the April 5, 2013 semi-annual interest payment on the 2015 Notes, and as a result, after the expiration of the 30-day cure period, an event of default occurred under the indenture governing the 2015 Notes, which could result in the filing of an involuntary petition for bankruptcy against the Company. As a result of the event of default, the trustee of the 2015 Notes or the holders of at least 25% in aggregate principal amount of the 2015 Notes have the right to declare the 2015 Notes immediately due and payable at their principal amount together with accrued interest. As of May 15, 2013, total accumulated principal and interest on the 2015 Notes (including default interest) equaled $46,696,498. The Company has not received any notice of acceleration of the 2015 Notes as of May 14, 2013 and it is engaged in discussions with the holders of the 2015 Notes in connection with the interest payment and/or a modification of the indenture.

Net cash used in operating activities during Q1-13 was $0.25 million, as compared to net cash used in operating activities of $0.5 million in the comparable 2012 reporting period. Net cash used in investing activities during Q1-13 was $0.9 million, as compared to net cash used in investing activities in the prior-year period of $15.1 million.

Q1-13 Unit Cost and Expense ComparisonsTotal lease operating expense (LOE) for Q1-13 was $0.6 million, as compared to $1.7 million in the prior-year period. On a per-unit basis, Q1-13 LOE was $1.26 per thousand cubic feet of natural gas equivalent (Mcfe), as compared to $1.89 per Mcfe in the prior-year period. The 33% decrease in LOE per Mcfe is primarily attributable to the conveyance of a 50% interest in certain of the Company's properties in connection with the Uinta Basin transaction which closed during March 2012 and a 76% decrease in workover expenses because of fewer projects during Q1-13.

Transportation and processing expense was $0.5 million during Q1-13, or $0.99 per Mcfe, as compared to $0.7 million during the prior-year period, or $0.74 per Mcfe. The 35% increase in these expenses per Mcfe during Q1-13 reflects higher transportation and processing costs related to cryogenic processing which commenced in February 2013.

Depletion, depreciation and amortization (DD&A) was $0.4 million for Q1-13, as compared to $0.9 million during the prior year period. On a per-unit basis, DD&A for Q1-13 was $0.82 per Mcfe, as compared to $0.95 per Mcfe in the prior-year period.

The Company reported general and administrative expense (G&A) of $1.0 million for Q1-13, versus $1.4 million in the prior-year period. On a per-unit basis, total G&A for Q1-13 was $2.12 per Mcfe, as compared to $1.58 per Mcfe for the same period in 2012. G&A expense for Q1-13 includes $52,000 of non-cash, stock-based compensation expense, or, on a per-unit basis, $0.11 per Mcfe, as compared to the prior-year total of $60,000, or $0.07 per Mcfe.

Gasco Energy, Inc.

Q1-13

Q4-12

Q1-12

% Change

Unit Cost Analysis

Sequential

Q-o-Q

Sales Volumes in Barrels of Oil Equivalent (Mcfe)

455,937

539,977

891,077

-16%

-49%

Average Price Received Gas ($ / Mcf)

$ 3.38

$ 3.53

$ 2.77

-4%

22%

Average Price Received Oil ($ / Bbl)

79.21

72.79

88.26

9%

-10%

LOE Components

-

-

-

-

-

Direct Operating Expenses ($ / Mcfe)

0.98

2.31

1.03

-58%

-4%

Workover Expense ($ / Mcfe)

0.19

0.25

0.79

-26%

-76%

Production Tax ($ / Mcfe)

0.09

0.12

0.08

-24%

20%

Total Lease Operating Expense ($ / Mcfe)

1.26

2.12

1.89

-40%

-33%

Transportation Expense ($ / Mcfe)

0.99

0.37

0.74

165%

35%

DD&A Expense ($ / Mcfe)

0.82

1.31

0.95

-38%

-14%

G&A Expense ($ / Mcfe)

2.12

2.12

1.58

0%

35%

Non-cash Stock-based Compensation Expense ($ / Mcfe)

$ 0.11

$ 0.10

$ 0.07

15%

70%

Q1-13 ProductionEstimated cumulative net production for Q1-13 was 456 million cubic feet of natural gas equivalent (MMcfe), as compared to 892 MMcfe in the prior-year period. Included in the Q1-13 equivalent calculation are production volumes of 5,500 barrels of liquid hydrocarbons, as compared to the prior-year period production volumes of 9,900 barrels of liquid hydrocarbons. Net production changes are attributed to the Uinta Basin transaction and to normal production declines in existing wells, which were partially offset by new producing wells and recompletions and workovers of existing wells.

OutlookDue to the significant extended decline in the natural gas market and sustained low natural gas prices in recent years caused by excess production and stagnant growth in the demand for natural gas, Gasco has not been able to recover its exploration and development costs as anticipated. As such, there is substantial doubt regarding the Company's ability to generate sufficient cash flows from operations to fund its ongoing operations, and the Company currently anticipates that cash on hand and forecasted cash flows from operations will only be sufficient to fund cash requirements for working capital through the second quarter of 2013.

In addition, the Company has not paid the April 5, 2013 semi-annual interest payment on its 2015 Notes, and as a result, after the expiration of the 30-day cure period, an event of default occurred under the indenture, which could result in the filing of an involuntary petition for bankruptcy against the Company. As a result of the event of default, the trustee of the 2015 Notes or the holders of at least 25% in aggregate principal amount of the 2015 Notes have the right to accelerate payment obligations under the 2015 Notes. As of May 15, 2013, total accumulated principal and interest on the 2015 Notes (including default interest) equaled $46,696,498. The Company has not received any notice of acceleration of the 2015 Notes as of May 14, 2013 and it is engaged in discussions with the holders of the 2015 Notes in connection with the interest payment and/or a modification of the indenture.

Gasco has not allocated any amounts to the 2013 capital budget. The Company's prior revolving credit facility matured in June 2012, at which time Gasco repaid all of the outstanding borrowings thereunder. While the Company has attempted to secure a replacement facility, it has been unable to do so on acceptable terms and the Company is no longer actively in discussions to obtain a replacement facility. There can be no assurance that Gasco will be able to adequately finance its operations or execute its existing short-term and long-term business plans, and the Company's liquidity and results of operations are likely to be materially adversely affected if it is unable to generate sufficient operating cash flows, secure additional capital or otherwise pursue a strategic restructuring, refinancing or other transaction to provide the Company with additional liquidity.

Gasco has engaged Stephens, Inc., a financial advisor, to assist the Company in evaluating such potential strategic alternatives, including a sale of the Company or all of its assets. It is possible these strategic alternatives will require the Company to make a pre-packaged, pre-arranged or other type of filing for protection under Chapter 11 of the U.S. Bankruptcy Code (or an involuntary petition for bankruptcy may be filed against the Company). These factors raise substantial doubt about Gasco's ability to continue as a going concern.

Teleconference CallA conference call with investors, analysts and other interested parties is scheduled for 4:30 p.m. EDT on Wednesday, May 15, 2013 to discuss Q1-13 financial and operating results. You are invited to participate in the call which will be broadcast live over the Internet and via teleconference.

About Gasco EnergyDenver-based Gasco Energy, Inc. is a natural gas and petroleum exploitation, development and production company engaged in locating and developing hydrocarbon resources, primarily in the Rocky Mountain region and in California's San Joaquin Basin. Gasco's principal business is the acquisition of leasehold interests in petroleum and natural gas rights, either directly or indirectly, and the exploitation and development of properties subject to these leases. Gasco focuses its drilling efforts in the Riverbend Project located in the Uinta Basin of northeastern Utah, targeting the oil-bearing Green River Formation and the natural gas-prone Wasatch, Mesaverde, Blackhawk, Mancos, Dakota and Morrison formations. To learn more, visit Gasco's website at www.gascoenergy.com.

Forward-looking StatementsCertain statements set forth in this press release relate to management's future plans, objectives and expectations. Such statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this press release, including, without limitation, statements regarding Gasco's strategic alternatives, future financial position, expectations with respect to its liquidity, capital resources and ability to continue as a going concern, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. These statements express, or are based on, management's current expectations and forecasts about future events. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "should," "would," "could," "expect," "intend," "project," "estimate," "anticipate," "plan," "believe," "foresee," or "continue" or the negative thereof or similar terminology.

Although any forward-looking statements contained in this press release or otherwise expressed by us are to the knowledge and in the judgment of management, believed to be reasonable when made, there can be no assurances that any of these expectations will prove correct or that any of the actions that are planned will be taken. Forward-looking statements involve and may be affected by inaccurate assumptions, and known and unknown risks and uncertainties (some of which are beyond Gasco's control), that may cause Gasco's actual performance and financial results in future periods to differ materially from any projection, estimate or forecasted result. Some of the key factors that may cause actual results to vary from those Gasco expects include the recent resignation of W. King Grant, Gasco's President, Chief Executive Officer and director; Gasco's failure to make the April 5, 2013 interest payment on its outstanding convertible senior notes and the right of the trustee or holders of at least 25% in aggregate principal amount of the notes to accelerate payment obligations; Gasco's ability to pursue strategic restructuring, refinancing or other transactions which may be necessary to continue as a going concern; any determination by Gasco to make a pre-packaged, pre-arranged or other type of filing for protection under Chapter 11 of the U.S. Bankruptcy Code or the filing of an involuntary petition for bankruptcy against Gasco; Gasco's ability to maintain adequate cash flow from operations or obtain adequate financing to fund its operations and meet working capital needs and its related ability to continue as a going concern; volatility and declines in Gasco's stock price and its ability to regain and maintain compliance with NYSE MKT continued listing standards; the ability to meet firm commitment delivery obligations in transportation and processing agreements or otherwise satisfy minimum volume deficiency payment obligations; the ability to maintain relationships with suppliers and customers; overall demand for natural gas and oil in the United States; the ability to successfully operate within the restrictions imposed by the indenture governing Gasco's convertible senior notes; any requirement to write down the carrying value of oil and natural gas properties due to reductions in oil and natural gas prices, or downward adjustments to estimated proved reserves; inherent uncertainties in interpreting engineering and reserve or production data; operating hazards; delays or cancellations of drilling operations because of weather and other natural and economic forces; fluctuations in oil and natural gas prices; competition from other companies with greater resources; environmental and other government regulations, including new or proposed legislation; defects in title to properties; inability to borrow or unavailability of other sources of capital resources to fund capital expenditures; general economic conditions in the United States; Gasco's ability to manage interest rate and commodity price exposure; the condition of credit and capital markets in the United States; and other risks described in (1) Part I, "Item 1A–Risk Factors," "Item 7–Management's Discussion and Analysis of Financial Condition and Results of Operations," "Item 7A–Quantitative and Qualitative Disclosure About Market Risk" and elsewhere in Gasco's Annual Report on Form 10-K for the year ended December 31, 2012, [(2) Part II, "Item 1A—Risk Factors," in Gasco's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013] and (3) Gasco's other reports and registration statements filed from time to time with the SEC.

Any of these factors could cause Gasco's actual results to differ materially from the results implied by these or any other forward-looking statements made by Gasco or on its behalf. Gasco cannot assure you that its future results will meet its expectations. When you consider these forward-looking statements, you should keep in mind these factors. All subsequent written and oral forward-looking statements attributable to Gasco, or persons acting on its behalf, are expressly qualified in their entirety by these factors. Gasco's forward-looking statements speak only as of the date made. Gasco assumes no duty to update or revise its forward-looking statements based on changes in internal estimates or expectations or otherwise.

[Financial and Operational Tables Accompany this News Release]The notes accompanying the financial statements are an integral part of the consolidated financial statements and can be found in Gasco's Filing on Form 10-Q for the quarter ended March 31, 2013 filed with the SEC on May 15, 2013.

GASCO ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31,

December 31,

2013

2012

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$ 1,778,330

$ 2,938,086

Accounts receivable

Joint interest billings

2,077,097

1,753,204

Revenue

594,903

777,567

Inventory

1,730,733

1,730,733

Prepaid expenses

105,665

153,848

Total

6,286,728

7,353,438

PROPERTY, PLANT AND EQUIPMENT, at cost

Oil and gas properties (full cost method)

Proved properties

264,872,686

264,814,427

Unproved properties

31,888,960

31,486,314

Facilities and equipment

1,499,297

1,493,314

Furniture, fixtures and other

506,511

506,511

Total

298,767,454

298,300,566

Less accumulated depletion, depreciation, amortization and impairment

(253,572,691)

(253,176,523)

Total

45,194,763

45,124,043

NONCURRENT ASSETS

Deposit

531,443

531,443

Deferred financing costs

775,185

845,367

Total

1,306,628

1,376,810

TOTAL ASSETS

$ 52,788,119

$ 53,854,291

GASCO ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

(Unaudited)

March 31,

December 31,

2013

2012

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$ 1,363,455

$ 1,548,121

Revenue payable

2,172,383

2,454,282

Advances from joint interest owners

47,667

47,667

Accrued interest

1,207,616

586,556

Accrued expenses

292,000

396,000

Total

5,083,121

5,032,626

NONCURRENT LIABILITIES

5.5% Convertible Senior Notes due 2015, net of unamortized discount of $17,349,359 as of March 31, 2013 and $18,530,539 as of December 31, 2012